One day after the Major League Baseball Players Association made its opening proposal in the ongoing negotiations for the next Collective Bargaining Agreement (CBA), the league responded. Most notably, clubs and their owners, as widely expected, have proposed a salary cap beginning in 2027.
Specifically, the league is proposing, via ESPN:
- A salary cap, including benefits expenses, of $245.3 million;
- A salary floor, also including benefits expenses, of $171.2 million;
- A 50-50 revenue split between clubs and players;
- Local revenues would be centralized and also shared equally.
Because of the inclusion of benefit payments -- i.e., pension contributions, health insurance, and so forth -- determining which teams are presently above the proposed cap line and below the proposed floor isn't a simple matter. The best proxy for such payroll calculations is those used for the Competitive Balance Tax (CBT), or luxury tax. Those use the average annual value of long-term contracts in their calculations, but they also include the cost of player benefits.
According to Cot's Contracts CBT payroll estimates, a total of nine teams would likely be above the proposed cap figure this season:
Team
2026 CBT payroll
$420 million
$379.2 million
$338.7 million
$322.7 million
$314.8 million
$268.7 million
$259.2 million
$253.4 million
$249.7 million
The Detroit Tigers, with a 2026 CBT payroll of $245.2 million, just barely miss the cap cutoff.
Also per Cot's, 12 teams come in under the proposed payroll floor, again counting benefits payments:
Team
2026 CBT payroll
$151.1 million
$141.9 million
$141.4 million
$139.7 million
$138.5 million
$131.8 million
$122.7 million
$112.9 million
$112.2 million
$111.7 million
$88.8 million
$82 million
As Craig Goldstein points out, the amount needed to get all these teams below or above the relevant payroll thresholds amounts to an $18.7 million loss in aggregate player salary overall. Since teams pay roughly $23 million in player benefits each year, you can think of the league's proposed figures as roughly a $222 million cap and $148 million floor on cash payrolls.
For its part, the MLBPA has been steadfast in its refusal to agree to a salary cap in CBA negotiation after CBA negotiation, spanning decades. There's no reason to expect any kind of different outcome this time.
Among major North American sports leagues, MLB is the only one without a cap on team payrolls. While the league is attempting to cast its calls for a cap as a means to promote competitive balance, the reality is that there's an increasing belief among the ownership class that not having a capped system is hurting franchise valuations. Still, it's notable that the small-market San Diego Padres recently sold for a record $3.9 billion.
Another point of contention is sure to be the calculation of the 50-50 revenue split. No doubt teams will want to carve out, for instance, the various and sundry real estate developments that have cropped up around ballparks. The union, meanwhile, would surely argue that those developments would not exist without the lure of baseball games and players.
MLBPA makes first proposal to MLB ahead of CBA expiration: What to know as league tries to avoid lockout Dayn Perry
Another notable development is the league's call for centralized local revenues. Commissioner Rob Manfred has been managing tensions between small- and large-market owners over his desire to shift to a more national model of broadcast rights. Flagship clubs that own their own regional sports networks no doubt needed persuasion to agree to increased sharing of those revenues, and the pursuit of a cap on the highest payrolls is probably essential to their acquiescence.
If that push for a cap fails, you may see renewed resistance from the clubs that carry the league as it applies to a nationalized broadcast model. As well, any changes to the revenue-sharing system are subject to collective bargaining, meaning the players and their union must agree to them.
In contrast to MLB's proposals, the union on Thursday proposed the following, in part:
- A "competitive integrity tax" levied against teams that don't spend a minimum amount on player payroll.
- An increase of the minimum salary from $780,000 to $1.5 million.
- An increase of the bottom Competitive Balance Tax (more commonly known as the luxury tax) threshold from $244 million to $300 million.
- Increased sharing of local-broadcast revenues among teams but less sharing of stadium game-day revenues (the latter to incentivize on-field success).
- Tens of millions in extra revenue sharing to go to low-revenue teams that make the postseason or have a winning record.
- Free agency after five or more years, rather than six, for players who are at least 30 years of age at the time.
- Expanded draft lottery.
- Penalties for teams that neglect to spend revenue-sharing payments on team payroll.
- Draft picks and other incentives for low-revenue clubs active in free agency.
- Elimination of the qualifying offer for outgoing free agents.
- Increased compensation for lower-revenue teams losing players to free agency.
The two sides are, of course, far apart, both in framework and specifics, but that's to be expected at this relatively early hour. Lots of negotiating is still to come, as is, most likely, lots of calculated public hand-wringing about how unreasonable the other side is being.
The current CBA expires on Dec. 1, at which point the owners are expected to lock out the players. Owners also locked out the players during the last round of CBA talks, leading to a 99-day lockout and delaying the start of spring training and the 2022 regular season. That marked the sport's first labor stoppage since 1994-95.
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